Larry Solow: No. I was just going to say, I just I know you’re not guiding, sorry to interrupt. I know you’re not guiding on the revenue line specifically, but just from a high level, if you decline 4% at the mid-point, right? If I just – if the rest of your business is flat and China’s down 25%, you’d be, you’ll decline 4%. That’s just the way the math works out, like almost to a key [ph]. So my – again, it sounds like the rest of your business might actually be up. So it feels like China could actually be down more than 25% in front and bigger in the beginning of the year. Am I thinking about that kind of right?
Sam Maheshwari: Larry, we are not guiding by geography or anything, but in some ways you are thinking in a right way. We are expecting China full year to be a down year for 2024. In terms of percentages, et cetera, we are not guiding. But broadly, you are thinking about it right. Yes.
Larry Solow: Okay. Okay. And I interrupted you. I don’t know, were you trying to say something before that? I’m sorry about that.
Sam Maheshwari: I was trying to say something Larry, but now I forgot what your question was.
Larry Solow: That’s okay. All right. I’ll move on. I’ll let someone else get into the queue. Thank you, guys.
Sam Maheshwari: Sure. Yes.
Operator: Our next question comes from the line of Suraj Kalia with Oppenheimer. Please proceed with your question.
Suraj Kalia: Sam, Sunny, can you hear me all right?
Sunny Sanyal: Yes. Hello, Suraj.
Sam Maheshwari: Yes.
Suraj Kalia: Good afternoon, gentlemen. So Sunny, did I hear you all correctly that the expectation of the anti-corruption wave to abate is roughly around two quarters? Or did I get that wrong?
Sunny Sanyal: We’re expecting that we will start to see things pick up again in our beginning of our third quarter. So that’s again the situation is little fluid. We will know better in the upcoming months, but the current expectation is that mar – in Q3 – beginning of Q3 onwards, we would start to see it pick back up.
Suraj Kalia: Got it. Sam, I know there are a lot of moving parts, appreciate that. But to the extent that China contribution is soft, does it necessarily now should we start looking at gross margin? There should be an uptick.
Sam Maheshwari: Yes, so that’s right, Suraj. China, lack of China revenues or less proportion of China revenues is actually a tailwind for the gross margin. But we also need to keep in mind, the volume effect of it. So the two aspects intersect, but part of the reason Q4 gross margin were much higher than our expectation is because China mix went lower than what we were expecting at the beginning of the quarter. So your intuition is right there that less China revenue does help gross margin, but only to the extent that the volume is not – lack of volume is not becoming the driving factor.
Suraj Kalia: Got it. Sunny, in terms of tubes and detector manufacturing in India, is this strategy local for local or local for international?
Sunny Sanyal: No. India is going to be first local for global and then later also local for local. So the India strategy is an extent is slightly different from that of China, in this case, we’re setting India up as a full capability operating center. So full manufacturing for extending our capacity from Salt Lake to India and then also business functions, R&D, et cetera. So India’s going to become a full blown hub for us for South Asia.
Suraj Kalia: Got it. Got it. Final question, Sam, and I’ll hop back in queue. So Sam, since the time that I’ve picked up Varex, I think so almost three years ago to now just ballparking it. Okay. Industrials has gone from almost 20% contribution to, let’s say, around 30% contribution, right, to overall sales. Obviously, there are respective growth rates in these two buckets. As we look forward over, let’s say, the next four, eight quarters, is this a trajectory that we should continue to expect, i.e., increasing contribution of industrials and that’s really how we should start thinking about the overall business. Or do you think like to steal Sunny’s words that some temporary malaise, but then it should revert back to the 80/20? Gentlemen, thank you for taking my questions.
Sam Maheshwari: Yes. Suraj, very good question. In general, Industrial business growth rate for us is higher than the Medical business growth rate. So I expect the overall contribution of Industrial segment to our revenues to continue to climb. And in the next three to five years, it might cross 30%. So that is the right way to think about it. There are just a lot of applications that we are seeing that X-ray technology can be very successfully applied in for the Industrial business. So right now, we are thinking that eventually Industrial could go 30% or somewhat even higher than that in terms of the overall revenue proportion.
Suraj Kalia: Thank you.
Sam Maheshwari: Thanks, Suraj.
Operator: Our next question comes from the line of Anthony Petrone with Mizuho. Please proceed with your questions.
Anthony Petrone: Thanks and good afternoon. Maybe just to segue back to China, Sunny you mentioned, it’s – tubes are still sort of trending well here, but it’s been a slowdown on the capital front. But I just want to confirm, we’ve heard actually both headwinds throughout the quarter due to anti-corruption, meaning that procedures were down through the third quarter, but also that capital purchases slowed down. So I know you mentioned tubes were still trending well, has there been any slowdown in tubes? And do you expect actually tubes can also see a catch up once things normalize into next year? And I’ll have one follow-up.
